PRESENTATIE RICH GREENFIELD, ANALIST BIJ LIGHTSHED PARTNERS

Hieronder laten we u een uitgeschreven versie lezen van een presentatie van Rich Greenfield, analist bij Lightshed Partners, een onderzoeksbureau dat de technologie-, media- en telecommunicatiesectoren analyseert voor institutionele investeerders, en dat gevestigd is in New York City.

Deze presentatie gaat dieper in op de impact die de evoluties in de tv-wereld hebben op hoe bedrijven hun advertising & andere marketing zullen moeten heroriënteren. De presentatie werd gegeven op 15 juli, 2020 op Procter & Gamble’s Signal 2020 virtuele conferentie. We laten het in het Engels staan, om geen vertaalruis te krijgen op wat de analist bedoelt.

Bron:

https://lightshedtmt.com/2020/07/15/watch-lightsheds-richard-greenfield-present-at-pg-signal-2020/#Disruption, presentation centered on how the media industry has been forced to rapidly shift from a B2B/wholesale model to a direct-to-consumer/retail model to prevent being replaced by massively scaled tech platforms

As media companies shift their business’ most ambitious content from linear TV to streaming, cord-cutting is accelerating rapidly and time spent with linear TV is collapsing. In turn, brands/marketers needs to rethink their approach to advertising and find consumers on a growing array of digital/mobile platforms.

Brands need to add value to consumers’ lives with compelling content, rather than force their way in through ads that interrupt their experience.

There is no doubt that the disruption of media is happening at a pace that we have never seen before.

You don’t have to look any further than just the market caps of these companies. Look at the way the Tech companies have overshadowed the Media companies.

The fact that Netflix is now bigger than Verizon, Disney, ATT, Comcast in market cap. Lionsgate and AMC Networks are almost like pimples where they don’t even show up on the slide at this point, because they are so small versus the nearing the two trillion dollar market caps of Apple and Amazon. What you really think about when you see these companies is that they have direct relationships, these platforms have direct relationships with the consumer. They know who you are, they know everything about you, they know what you’ve been doing. Yet most of the media sector that has grown up over the last several decades, knows nothing about you, they have been simply wholesalers of content. The reality is that each of these media companies is now facing this reality that you need to have this direct relationship with your consumer.

In a very short period of time, 4 years, a transformation has occurred in media. There has been a dramatic turn from ‘Netflix is a friend (2015)’ to ‘the bundle basically doesn’t work for the consumer anymore’. Do you think the consumer really wants to buy 150 – 200 channels of programming, for a fairly significant price when they are not interested in many of those channels? We are seeing a real profound and permanent change. In today’s world, if you have access to your consumer, technology is providing you with incredible data. We have to provide the consumer with a more customized, personalized experience.

In 2014 Disney gave a presentation up in Bristol, CT. This was a Disney led presentation on the state of the multi-channel bundle. Look at the part that we have highlighted here.

Cord-cutting is fractional. There were over 100 million subscribers to the multi-channel bundle. 100+ million homes were paying for multi-channel television whether they watched all those channels or even could find them. To use Robert Iger’s own words: “everybody was paying in”, “this was a great business with very high great margins, high profitability, and offered a great platform for advertisers”.

Let’s fast forward to where we are today. Pre-Covid, we were already losing 2 million subscribers in Q1 2020. We think it will be over 2 ½ million in Q2 and its very possible that by the end of this year, we are actually close to where subscribers of the multi-channel bundle were back in 1997. Just try to wrap your arms around the fact that you are only going to be able to reach 70+ million people out of 120-125 million households in this country through advertising on linear TV.

This shows us how fast this is now accelerating. But why is it accelerating? It is sort of obvious in a sense.

Because there are just too many options with great price value relationships. Think about all the names that are on this slide. Look at all of these services. One of the things that stands out most is how many of these services launched only in the course of the last year: Disney+, Apple TV+, Peacock just launched today. HBO Max just launched. Viacom, CBS All Access is relaunching early next year. You’ve got all these services being kind of acquired and being reinvested: FOX buying Tubi, Viacom buying Pluto. The reality is: there is this surge of content that doesn’t require the bundle. Many of these services don’t even have advertising, or they allow you to opt out of advertising if you pay a little bit more. The content is just getting started. What you see today versus what you will see in a few years. Think back to Netflix 2013 when they launched House of Cards versus where they are now. Think about where each of these services is going to be.

The bundle is getting crushed, even before these services ramp up. One of the things I hear from media executives all the time is: “if you aggregate all of these services that you saw in the last slide, you are spending more than you were actually spending in the bundle,”. That whole argument is BS, because the reality is the content that the consumer wants to see actually isn’t in the bundle. Star Wars, Mandalorian, you won’t find on cable television. The Crown you won’t find on Direct TV. Little Fires Everywhere, nowhere on Comcast. The problem is that for each of these services you do not any longer need the bundle. In many cases you can’t even have the bundle to actually gain access to this content. By far, the most ambitious content that is being created right now across the board, all of it, is going to these streaming services, because each of these companies go back to that starting point. Each of them wants to build a direct relationship with the consumer. They want to cut out the middle person. They want to actually understand who you are, what you are interested in, and be able to market directly to you. And that is that dramatic change in legacy media business.

Where does the bundle settle out? This is a slide from the same Disney ESPN presentation in 2014, where they themselves admit that only 30% of fans were avid fan. If you believe the avid fans are going to be the ones that are going to subscribe to the bundle and let’s say some of the casual fans do too, you are looking at a bundle that’s going to settle in somewhere between 40-50 million subscribers over the next several years. You are going to reach essentially 1/3 of TV households in roughly half of where you did back in 2012 by advertising or marketing on television. That is a huge problem for every brand in the world.

TV is not going to provide the platform to reach consumers, and on top of it, time spent with these devices is collapsing because now linear TV is just something you do part of the time. There are so many other options. Over the last ten years, time spent per person has gone from 5 hours to 3 hours.

26% of the population are heavy linear TV viewers and they are watching 86% of the linear TV. That is essentially the older demographics, because the younger demographics have shifted far more aggressively into the streaming category than the older demographics. The problem is, even if you are advertising on TV, you are reaching a small group of people over and over again and you are not reaching a large group of the population with your compelling messages. Just because they are no longer there. They are no longer engaged on those platforms.

I think every conversation now in media has to focus on the gaming sector. When you think about what’s happened over just the last few years. We will use Fortnite as an example. There are obviously many other examples right now that are exploding in gaming, but we use Fortnite, because this chart to me was fascinating. It shows that when people start to play Fortnite, it eats in to other activities, whether it is going to the movies, whether it’s listening to music. Fortnite is a time sucker. You get lost in these worlds. You see what happens as they start to embrace these platforms. Their daily lives shifts, from whether it be TV or music, into gaming.

Everyone likes to talk about streaming wars, and how Disney+ is hurting Netflix, but it’s Fortnite and it’s all of these new uses of time. It is this war for attention that everyone is fighting for. It goes a lot broader than just video, because marketers have to rethink what that marketing approach is. In terms of Covid-19, the big winner is actually not video. You see on this slide video streaming has gone up 37%. You see that linear TV was even up, although still down every year, it was up relative to where it started the year. The big winner, the huge winner, has been gaming (+213%). I think that all goes back to rethinking the marketing approach.

Whether it is what P&G did with Charmin, to pause ads on Hulu. Whether it is brands that are creating content, essentially branded content. You see what Shell did, where they actually took a YouTube show and ended up making it into a series on Amazon prime outside of the U.S.. Obviously influencers on YouTube, or even product placement. There was so much product placement in Stranger Things on Netflix.

It was almost absurd over the last couple of seasons.

There really needs to be this focus. There are big screen ways like we just showed to reach consumers.

But how do you reach them where they are spending the most time, which is on their mobile devices. I think a lot of that’s going to speak to either these mobile platforms. You had TikTok on before where it was showcasing TikTok. Look at Fortnite. Look at how brands are inserting themselves into these experiences organically where it is fun to use them. Coca Cola on Snapchat is on the right. You see the ability to use hashtag challenges on TikTok. It seems like actually one of the most innovative things is creating experiences on TikTok where you are interacting with the brand in a very unique way. It’s very organic and it is less interruptive than marketing has traditionally been on TV where it stops the experience you are in.

What are the opportunities beyond just product placement? You look at what they’ve done with Bounty, where Bounty is actually a reward video inside of Call of Duty mobile. Why don’t we see more of this?

The gaming companies know that ‘in game reward video’ works extremely well. That’s where consumers are spending more and more of their time. Make content, make ads that feel like content. That add value to the gaming experience, versus the interruptive experience that we’ve seen in TV over the last few years or last several decades. I think that is sort of what has to change.

When I think about this whole marketing equation, it’s all about making great content that doesn’t feel like ads, that doesn’t waste somebody’s time. That you actually want to share or talk about with consumers. There is just this sort of equation of how the brands have to change to adapt to the universe.

When you think about how fast this is moving. Just realize what happened to Disney over the last 4 years.

Every single other media company is having the same conclusion. That the legacy model is no longer sustainable. The faster they move to streaming, the faster it causes the consumer to shift away and that is why everyone needs to not be relying on TV and think differently about their approach to advertising and marketing.